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Best Buy loses trade-secrets lawsuit

December 07, 2012, 05:00 AM The Associated Press

LOS ANGELES — Consumer electronics retailer Best Buy Co. has lost a trade-secrets lawsuit and has been ordered to pay a California startup company $27 million.

The California company, TechForward, had claimed that Best Buy misappropriated its trade secrets and launched a buyback program for its shoppers after months of working with TechForward to help create a program of that type.

TechForward’s guaranteed buyback program had been used by other consumer electronics retailers around the country to help buyers defray the costs of keeping up with the latest technology. Under the program, customers pay a fee that allows them use a device, return it in the future and receive a store credit worth a percentage of the original purchase price. The credit can then be used toward the purchase of another device.

Best Buy, which is based in Richfield, Minn., announced the launch of its own buyback program in February 2011 with a Super Bowl commercial featuring Justin Bieber and Ozzy Osbourne. TechForward shortly afterward filed its lawsuit in the U.S. District Court for the Central District of California.

A jury last month awarded TechFroward $22 million after determining that Best Buy was unjustly enriched through misappropriation of trade secrets. The court this week also awarded TechForward $5 million in punitive damages.

Best Buy intends to vigorously challenge the verdict, company spokeswoman Maggie Habashy said Thursday.

TechForward, based in San Francisco, was founded in 2006 and sold to electronics protection plan provider SquareTrade Inc. in April.